Syriza party leader Alexis Tsipras failed to reach an agreement with pro-bailout governing parties New Democracy and Pasok yesterday. Mr. Tsipras has announced that he will "return the mandate [to form a government] to the president of the republic". Pasok leader Evangelos Venizelos will be the next to try to form a coalition government. Should he fail, as political analysts and party officials expect he will, Greece will have to hold another round of elections in June. This is expected to prolong the political turmoil and worsen the economic situation in the country.
After New Democracy leader Antonis Samara failed to form a new coalition government on Monday, the task fell to Syriza party leader Alexis Tsipras. The Syriza party, which identifies as leftist party, won the second-most seats in the Greece elections last week, after New Democracy. However, with no parties having sufficient seats to govern alone, Greece is left with its only option – to reform a new coalition government.
Mr. Tsipras has been given three days, after which the onus will pass to the Pasok party. Should all three parties fail to yield a coalition, Greece will have to hold a new round of elections. Taking an anti-bailout stance, Mr. Tsipras’ attempts to get the leaders of New Democracy and Pasok to revoke their pledges to the EU’s debt crisis rescue plan, which endorses austerity measures, have been unsuccessful.
Both parties previously backed the terms of the second EU/IMF deal signed by Prime Minister Lucas Papademos earlier this year. The plan has largely been unpopular with the Greeks, due to its requirements that Greece cut pensions and pay, raise taxes, and slash thousands of public sector jobs. Today, Mr. Tsipras is expected to meet the two pro-bailout parties to try once more to garner their support.
According to Mr. Tsipras, his new coalition government will be formed on the basis of an anti-bailout scheme. The scheme will see the cancellation of bailout terms and the formation of an international committee to find the cause of Greece’s public deficit, in addition to investigations into Greece’s banking system.
Mr. Tsirpras will be meeting with the leaders of all other parties except the neo-nazi Golden Dawn within the next two days. Thus far, he has only managed to secure an agreement from centre-left party Democratic Left, while the Communist Party of Greece has already rejected its offer to join the alliance.
SIIA Council Member Ho Seng Chee remarked that “Political developments over the weekend in France and Greece have laid bare the limits to which austerity measures can be pushed as part of the solution to the Eurozone crisis. The Spanish government’s about-turn in acknowledging the need to spend additional “billions of euros” to rescue Bankia – the country’s third largest bank – is another sign that Europe’s tenuous rescue packages are beginning to come undone. A new rescue compact will have to be agreed between Eurozone governments, the European Central Bank, and the IMF in the coming months. Until then, the reigning uncertainty will continue to deter investment and economic activity in the affected countries.”
Indeed, European Commission President Jose Barroso has said that “member states have… [to be] consistent, implementing the policies that they have agreed”. Germany has also declared that all countries must stick to budget cuts. Failure to do so may lead to Greece declaring bankruptcy once again, as well as its expulsion from the Eurozone.
Report: Will Greece need another election to form a government? [TIME, 8 May 2012]
Report: Greek leaders given bailout ultimatum [Bloomberg, 9 May 2012]
Report: Syriza’s Tsipras to meet Greece’s pro-bailout parties [BBC, 9 May 2012]
Report: Greek parties fail to form govt; fresh polls loom [Wall Street Journal, 9 May 2012]